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Study: Some health-insurance costs may jump 80%

The cost of health care for Ohioans who buy individual coverage directly from insurers is projected in one study to soar by more than 80 percent by 2017 under the federal health-care overhaul.

That would be the largest percentage increase among all states, according to a report released this week by the Society of Actuaries, a national group of financial-risk analysts.

But that’s due in large part to Ohio having some of the lowest average costs for individual health coverage.

In the state, the average monthly cost of medical claims per person currently is $223 and would rise to $403, still below the projected national average of $413.

Nationwide, the cost of medical claims is expected to rise 32 percent over the same period.

The society’s study focused only on the cost of medical claims, not on the ultimate cost to consumers, whose incomes will limit how much they pay under the law. Lower-income people who buy insurance also will qualify for subsidies.

Those subsidies will limit premiums to 2 percent of income for those whose incomes are at the federal poverty level ($11,170 for an individual in 2012) and 9.5 percent of income for those whose incomes are four times the federal poverty level.

A Society of Actuaries spokeswoman acknowledged the study’s limited scope. “We’re trying to measure ... the effect on underlying costs,” said Kristi Bohn, a staff fellow with the organization, based in Schaumburg, Ill.

The higher costs would be driven in part by people with pre-existing conditions and other high-risk, high-cost individuals who no longer can be excluded by health insurers with the changes that take effect next year. Another likely source of higher costs: large utilizers of health care who have insurance through an employer that decides to stop offering coverage or whose coverage isn’t as appealing to the employee as the individual market is.

The study did not examine the impact of the federal health-care overhaul on a much larger group of people: those who have health insurance through their employers.

The number of Ohioans who buy individual health coverage directly from insurers is expected to more than double between 2010 and 2017, from 350,000 in 2010 to 735,000 in 2017, according to a report commissioned by the state Department of Insurance.

The large percentage increase in Ohio partly reflects how low the average cost of individual plans has been in the state. According to the report, with the exception of Idaho, Ohio has the lowest per-member costs for individual coverage in the nation.

Lt. Gov. Mary Taylor, who also is director of the state Department of Insurance, credits competition as one reason for the low costs. She also said Ohio has not placed as many restrictions on how health insurers charge individuals for their plans. With the changes in federal health-care rules, insurance companies next year will be limited in the factors they can use to set rates.

“That is going to dramatically impact premiums in Ohio in a negative way,” Taylor said.

U.S. Health and Human Services Secretary Kathleen Sebelius said this week that many health-insurance policies are bare-bones plans that shouldn’t be compared to the comprehensive coverage required by the health law.

“Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” Sebelius said. “They’re really mortgage protection, not health insurance.”

Added Fabien Levy, press secretary for the U.S. Department of Health and Human Services: “It’s misleading to look at only some of the provisions of the law because, taken together, the law will reduce costs.”

It is difficult to compare current and future health-care costs in Ohio because future coverage will be more comprehensive, said Jeff Biehl, president of Access Health Columbus, a nonpartisan health-care improvement organization.

The Society of Actuaries is nonpartisan, Bohn said. But for help with the study it hired Optum, which is owned by the same company that owns the health insurer UnitedHealthcare.